The news sent global equities and commodity prices higher as Berlusconi’s exit could ease the passage of unpopular austerity measures needed to reduce debt and lower Italian government bond yields. [MKTS/GLOB]

The news was cheered by the Canadian financials sector, which climbed 0.7 percent and led the TSX higher. Canadian banks have little direct exposure to Europe, but their profits would be hit Europe’s debt crisis expanded to trigger a global recession.

Royal Bank of Canada (RY.TO) rose 0.9 percent to C$46.42 to lead the sector. Bank of Nova Scotia (BNS.TO) was up 1 percent to C$52.70.

Italy has displaced Greece as the focus of the euro zone’s sovereign debt crisis, with government bond yields nearing unsustainable levels, which could force the EU’s third largest economy to seek a bailout that Europe cannot afford.

“I don’t think Italy is in the sort of shape that Greece was in,” said Douglas Davis, chief executive officer at Davis-Rea. “At least they have a better infrastructure and a more reliable revenue system, and I don’t think it’s nearly the problem that Greece has been.”

Also pressuring broader gains, the gold-mining subsector slipped 1.5 percent after gold prices retreated in the face of a resolution to the Italian political situation. [GOL/]